Inflating budget, yet no defence modernisation

Budget National

By Pradnya Desai

Despite India’s upward trajectory in its defense spending over the past decade, the allocation for capital expenditure is in the doldrums.

India achieved the Rs. 3 lakh crore-mark last year, making it the highest ever defense allocation of India. Today, India has the third biggest defense budget in the world.

However, the Institute of Defense Studies and Analysis (IDSA) noted that most of the increased budgetary allocation in the fiscal year 2019-20 was directed for revenue expenditure. The same being Rs. 2,01,902 Crore, which was almost double the amount of the capital expenditure of that measured Rs. 1,03,394 Crore. The fiscal year 2016-17 saw negative growth in capital expenditure indicating no up-gradation in the defense sector.

Indian Army drew the biggest share in India’s defense revenue expenditure—56 per cent of the total defense budget. Experts have said spending on out-dated weapons needs to be reviewed. The army men in Chattisgarh have often complained about the inefficiency of the INSAS 5.56 mm rifles that are in wide use.

Considering India’s external debt to GDP ratio being 19.7 per cent as of March 2019, the central government fell short of funds for modernizing the defense sector.

In September 2019 an official document revealed plans to allocate funds worth $130 billion over the next five years to modernize the defense sector in India.

Defense pensions cater to 26 per cent of the total defense budget, while 71 per cent goes to the defense services. The spending on defense pensions increased from Rs. 21,790 crore in 2009-10 to Rs. 1,12,079.57 crore. This budgetary allocation increased with the introduction of One Rank One Pension scheme of 2018.

India’s defense budget with respect to GDP has dropped down to 1.45 per cent for FY 2019-20, making it the lowest for defense allocation in the decade.

India is therefore in need a dire need to channelize its expenditure to bring in defense modernization and save the buck that is dissipating into the conventional defense system.


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